Bloom and Plan organize a partnership on January 1. Bloom\'s initial investment
ID: 2446818 • Letter: B
Question
Bloom and Plan organize a partnership on January 1. Bloom's initial investment consists of $800 cash, $1,700 equipment, and a $500 note payable reflecting a bank loan for the new business. Plants' initial investment is cash of $2,000. These amounts are the values agreed on by both partners. The journal entry to record Plant's investment is:
Debit Cash $1,500; debit Note Payable $500; credit Plant, Capital $2,000
Debit Cash $2,000; credit Note Payable $500; credit Plant, Capital $1,500
Debit Bloom, Capital $2,000; credit Cash $2,000
Debit Cash $2,500; credit Note Payable $500; credit Plant, Capital $2,500
Debit Cash $2,000; credit Plant, Capital $2,00
Debit Cash $1,500; debit Note Payable $500; credit Plant, Capital $2,000
Debit Cash $2,000; credit Note Payable $500; credit Plant, Capital $1,500
Debit Bloom, Capital $2,000; credit Cash $2,000
Debit Cash $2,500; credit Note Payable $500; credit Plant, Capital $2,500
Debit Cash $2,000; credit Plant, Capital $2,00
Explanation / Answer
Correct option (e).
Since Plant has invested cash toward capital for the partnership, Cash (asset) has increased and Capital (Plant) has increased. Following is the journal entry:
DR Cash $2,000
Plant, capital $2,000